EURUSD Sold-Off After ECB Meeting

EURUSD – 1.4482 @06:40 GMT

Good morning. The euro is trading lower across the board as downside pressure is amplifying despite yesterday’s ECB signal that it will raise interest rates next month. One might ask why it declines when it’s quite clear that a rate hike is due in July? Well, the sell-off was mainly caused by lacking clues of interest rates beyond July and if you’re familiar with the market – then you already know that the market “likes” to react different than widely expected, especially because a rate hike was (and still is) priced in. Now that interim support at 1.4550 was broken, I think we’re going to see more weakness and a test of 1.4400 later today. My plan to sell on break of support at 1.4550/60 worked well so far and I’ll be holding the position with a stop around breakeven and an open target, probably looking to close half of it later today if the decline continues, leaving half open over the weekend. Today’s most important event in the economic calendar is a speech by Trichet in Frankfurt.

Trading strategy: holding short at 1.4550/60, with stop at breakeven, target open

Support: 1.4450, 1.4400 and 1.4335/50 Resistance: 1.4500, 1.4550/60, 1.4600 and 1.4650 Market sentiment: long term – mixed, medium term – bullish, short term – mixed, intraday – bearish

EURUSD 4hrs chart 6-10-2011

have a great day

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